July 13 (UPI) -- U.S.-based rideshare giant Uber will expand its business in Eastern Europe with Russian taxi service Yandex, the companies said Thursday.
The new company, worth $3.7 billion, will operate in 127 cities in six countries -- Russia, Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan, the companies said in a news release.
Yandex, which is primarily an Internet search powerhouse in Russia, will invest $100 million in the company and hold a majority stake of 59.3 percent. Uber will invest $225 million and hold a stake of 36.6 percent. The remaining shares will be held by company employees.
A company name has not yet been announced, but will operate the UberEATS food-delivery service. The transaction is scheduled to close at the end of this year and is subject to regulatory approvals.
The Uber and Yandex venture will continue to operate, while the driver apps will be integrated after the deal closes, the companies said. Users will be able to use their apps for business with the other company around the world -- called global "roaming."
Uber started its ride-booking operation in Moscow in 2014 and increased to 16 cities in Russia plus five in Azerbaijan, Belarus and Kazakhstan.
Yandex has gross bookings of $1.01 billion and Uber had $566 million, according to Bloomberg.
Yandex, which has been referred to as the "Google of Russia," has an expensive mapping database and can market its services online with the new company.
"Combining our business with Yandex will give us a very significant stake in a new company which will initially serve more than 35 million trips each month," Pierre-Dimitri Gore-Coty, head of Uber's business in Europe, the Middle East and Africa wrote in an email to employees Thursday.
Yandex estimates the combined company's share of the taxi sector in Russia 5 percent to 6 percent.
The official Russian taxi sector was approximately $8.4 billion, according to VTB Capital last year.
Unofficial or "gypsy cab" sector was estimated at $1.9 billion in 2015, according to the Analytical Center of the Government of Russian Federation).
"Many of us who work inside Yandex feel that everyone has already switched to ride-sharing, but in reality, we are just at the beginning of this journey," wrote Tigran Khudaverdyan, CEO of Yandex.Taxi in a blog post. "Our goal is to create a platform that rivals car ownership or public transportation in accessibility and convenience."
Last August, Uber announced plans to sell its business in China to rival ride-hailing service Didi Chuxing in a deal that values the merged Chinese company at $35 billion. Uber retains a 17.7 percent stake in the company. The two companies were in fierce competition for two years, offering deep subsidies to attract drivers and riders.